UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LffiRARY 


SUPPLEMENT  TO  TREASURY   DECISIONS 

(T.  D.  2837) 


TREASURY  DEPARTMENT 

UNITED  STATES  INTERNAL  REVENUE 


U'5.  Tuisry^il   l^^N/entie  S.£fVicA 

REGULATIONS  51 


RELATING  TO 


EXCISE  TAXES 


ON 


TOILET  and  MEDICINAL 
ARTICLES 


UNDER 


Section    907    of    the 
REVENUE  ACT  OF  1918 


WASHINGTON 

GOVERNMENT  PRINTING  OFRCE 

1919 


s 

so 


s> 


I  REGULATIONS 

RELATING   TO 

EXCISE  TAXES 

UNDER 

SECTION  907  OF   TITLE  DC  OF  THE  REVENUE  ACT  OF  1918. 

[Fublic,  No.  254,  65th  Congress.     H.  R.  12863.] 


CONTENTS. 


IMPOSITION    OP   TAX. 

Article.  Page. 

1.  Effective  date 4 

2.  Basis  of  tax 4 

3.  Who  is  the  dealer 4 

4.  Giving  of  premiums 6 

5.  Consumption  or  use 5 

6.  Articles  taxpaid  under  other  acts 5 

7.  Amount  of  tax 5 

8.  Sales  to  the  United  States  or  a  State 6 

TOILET  PREPARATIONS. 

9.  Toilet  preparations 6 

10.  Containers 6 

MEDICINAL   PREPARATIONS. 

11.  Medicinal  preparations:  Articles  included 6 

12.  Medicinal  preparations:  Scope  of  tax 7 

13.  Medicinal  preparations:  Under  formula 7 

14.  Medicinal  preparations:  Under  exclusive  right 7 

15.  Medicinal  preparations:  Under  letters  patent  or  trade-mark 7 

16.  Medicinal  preparations :  Held  out 8 

17.  Preparations  not  taxable 8 

18.  Sales  by  physician 9 

19.  Printed  directions  or  autographs 9 

COLLECTION    OF  TAX. 

20.  Collection  of  tax 9 

21.  Affixing  and  canceling  of  stamps 10 

22.  Redemption  of  stamps 10 

23.  Aids  to  collection  of  tax 11 

24."'>'Exemption  of  export  sale 11 

25.  Proof  of  exportation 12 

26.  Trade  with  poss^^ssions  of  United  States 13 

27.  Penalties 13 

28.  Promulgation 14 

115490°— 19  (3) 


EXCISE  TAXES  ON  TOILET  AND  MEDICINAL  PREPARATIONS. 


IMPOSITION  OF  TAX. 

Sec.  907.  (a)  That  on  and  after  May  1,  1919,  there  shall  be  levied,  assessed, 
collected  and  paid  (in  lieu  of  the  taxes  imposed  by  subdivisions  (g)  and  (h)  of 
section  COO  of  the  Revenue  Act  of  1917)  a  tax  of  1  cent  for  each  25  cents  or  frac- 
tion thereof  of  the  amount  paid  for  any  of  the  following  articles  when  sold  by 
or  for  a  dealer  or  his  estate  on  or  after  such  date  for  consumption  or  use. 

Article  1.  Effective  date. — The  tax  is  effective  as  to  all  sales 
made  on  and  after  May  1,  1919,  superseding  the  manufacturer's  tax 
imposed  by  subdivisions  (g)  and  (h)  of  section  600  of  the  Revenue 
Act  of  1917,  which  tax  remains  in  force  until  and  including  April  30, 
1919. 

Art.  2.  Basis  of  tax. — The  tax  is  measured  by  the  price  for  which 
the  article  is  sold.  It  is  on  the  actual  sales  price  and  not  on  the  list 
price,  where  that  differs  from  the  sales  price.  The  tax  is  payable  in. 
respect  to  a  sale  made,  whether  or  not  the  purchase  price  is  actually 
collected.  A  discoimt  for  cash  or  other  discount  made  subsequently 
to  the  sale  can  not  be  deducted  in  computing  the  price  for  the  pur- 
pose of  the  tax.  Commissions  to  agents  or  others  and  other  expenses 
of  sale  are  not  deductible  from  the  price.  If  articles  are  sold  and 
the  delivery  charges  to  point  of  delivery  are  paid  by  the  purchaser 
as  a  specific  item,  or  if  the  articles  are  sold  delivered  at  a  sum  less 
delivery  charges  to  be  paid  by  the  purchaser,  such  charges  need  not 
be  included  as  part  of  the  price  of  the  goods;  but  if  the  dealer  sells 
goods  at  a  delivered  price  and  himself  pays  the  delivery  charges,  he 
is  not  entitled  to  make  any  deduction  on  account  of  the  inclusion  in 
the  price  of  delivery  charges. 

Art.  3.  Who  is  the  dealer. — For  the  purpose  of  the  tax  and  as 
used  in  these  regulations  the  term  "dealer"  means  any  individual, 
partnership,  association,  or  corporation  engaged  in  the  business  of 
selling  for  profit  any  of  the  enumerated  articles  to  a  purchaser  for 
consumption  or  use  and  the  estate  of  such  a  dealer.  Thus,  a  dealer 
may  be  a  manufacturer,  jobber,  wholesaler,  retailer,  mail-order  house, 
installment  house,  trustee  in  bankruptcy,  receiver,  pawnbroker,  or 
peddler,  if  the  sale  is  for  consumption  or  use;  but  a  casual  sale,  not 
in  the  course  of  trade  or  business,  by  an  individual  of  any  of  the 
enumerated  articles  does  not  constitute  the  vendor  a  "dealer"  within 
the  meaning  of  this  section.  An  auctioneer  or  broker  is  a  dealer 
within  the  meaning  of  the  act  in  respect  of  all  sales  made  by  him  of 
articles  in  which  he  has  title,  but  not  in  respect  to  articles  which  he 
is  selling  as  an  agent. 

(4) 


AnT,  4.  Giving  of  preminms. — The  giving  of  so-called  "premiums" 
in  return  for  wrappers,  labels,  coupons,  trading  stamps,  or  other  scrip 
delivered  or  sold  in  connection  with  the  sale  of  a  commodity  is  a  sale 
by  a  dealer  within  the  meaning  of  this  section  if  the  premium  is 
within  the  class  of  enumerated  articles.  In  such  cases  the  tax  at- 
taches at  the  time  title  in  the  premium  passes  to  the  person  re- 
ceiving it  in  exchange  for  such  scrip  and  is  to  be  computed  on  the 
fair  market  value  of  the  premium  at  such  time. 

Art.  5.  Consumption  or  use. — An  article  is  sold  "for  consumption 
or  use"  within  the  meaning  of  this  section  if  it  is  sold  for  any  other 
purpose  than  to  be  sold,  leased,  or  otherwise  disposed  of  for  profit, 
whether  or  not  after  change  in  form  by  process  of  manufacture. 
Unless  the  purchaser  is  a  wholesaler,  retailer,  or  manufacturer  cus- 
tomarily engaged  in  the  business  of  selling  or  further  manufacturing 
the  article  in  respect  to  which  the  apphcability  of  the  tax  is  in  ques- 
tion, the  sale  to  such  purchaser  will  be  deemed  to  be  for  consumption 
or  use,  unless  the  contrary  is  clearly  shown.  In  other  words,  a  sale 
to  one  who  buys  in  order  to  resell  is  not  a  sale  for  consumption  or  use. 

Art.  6.  Articles  taxpaid  under  other  acts. —  (a)  The  tax  is  on  the 
sale  by  or  for  a  dealer  or  his  estate,  when  any  of  the  enumerated 
articles  are  sold  for  consumption  or  use,  regardless  of  whether  or  not 
a  tax  under  any  other  law  has  been  previously  paid  on  such  articles. 

(b)  Articles  in  respect  to  which  the  manufacturer's  excise  tax  im- 
posed by  section  600  of  the  Revenue  Act  of  1917  has  been  paid  are 
taxable  under  section  907  when  sold  by  or  for  a  dealer  or  his  estate 
for  consumption  or  use. 

Art.  7.  Amount  of  the  tax. — The  amount  of  the  tax  is  1  cent  of 
each  25  cents  or  fraction  thereof  of  the  amount  paid  by  the  purchaser 
for  the  articles;  and  the  dealer,  after  exactly  determining  the  selling 
price  of  the  article,  must  affix  thereto  stamp  or  stamps  of  the  proper 
denomination  denoting  the  correct  amount  of  the  tax;  and  these  two 
amounts,  being  distinct  separate  entities,  must  be  clearly  shown  to 
the  purchaser  to  be  the  price  of  the  article  sold  and  the  amount  of 
the  tax  due  thereon. 

Proper  stamps  have  been  provided  for  the  purpose  of  paying  the 
tax.  They  will  be  furnished  in  the  following  denominations:  1  cent, 
2  cents,  3  cents,  4  cents,  5  cents,  8  cents,  10  cents,  20  cents,  and  40  cents. 

They  will  be  placed  on  sale  in  the  office  of  collectors  of  internal 
revenue,  stamp  deputies,  post-offices  and  various  agencies  throughout 
each  collection  district. 

An  article  sold  for  1  cent  to  25  cents  requires  stamp  1  cent; 
26  cents  to  50  cents  requires  stamp  2  cents; 
51  cents  to  75  cents  requires  stamp  3  cents; 
76  cents  to  SI. 00  requires  stamp  4  cents; 
$1.01  to  SI. 25  requires  stamp  5  cents; 
etc.,  etc. 

(See  Article  21,  in  regard  to  affixing  and  cancelling  stamps.) 


6 

Abt.  8.  Sales  to  tlie  United  States  or  a  State. — The  tax  applies 
to  the  sale  to  the  Government  of  articles  enumerated  in  this  section. 
Articles  sold  to  a  State  or  pohtical  subdivision  thereof  for  use  in 
carrying  on  its  governmental  operations  are  not  taxable. 

TOILET  PREPARATIONS. 

(1)  Perfumes,  eBRences,  extracts,  toilet  waters,  cosmetics,  petroleum  jellies, 
hair  oils,  pomades,  hair  dressings,  hair  restoratives,  hair  dyes,  tooth  and  mouth 
washes,  dentifrices,  tooth  pastes,  aromatic  cachous,  toilet  powders  (other  than 
soap  powders),  or  any  similar  substance,  article,  or  preparation  by  whatsoever 
name  known  or  distinguished,  any  of  the  above  which  are  used  or  applied  or 
intended  to  be  used  or  applied  for  toilet  purposes. 

Art.  9.  Toilet  preparations. — Section  907  includes  concentrated 
extracts  or  essences  sold  to  the  user  to  be  used  in  connection  with 
the  toilet,  bath,  or  the  care  of  the  body,  or  upon  the  clothing  as  a 
perfume  or  toilet  article.  However,  concentrated  essences  sold  for 
the  purpose  of  making  toilet  articles,  but  not  for  use  as  such,  are 
not  subject  to  the  tax. 

Toilet  soap  powders  are  expressly  exempted  by  the  act.  Toilet 
soaps  are  not  taxable  under  section  907,  but  they,  as  well  as  toilet 
soap  powders,  are  taxable  under  section  900  when  sold  by  the 
manufacturer,  producer,  or  importer. 

Art.  10.  Containers. — ^The  tax  is  upon  tlie  combined  price  of  the 

container    and    its    contents.     The    containers    of    taxable    articles 

constitute  a  part  of  the  article  sold  when  sold  filled  with  the  taxable 

preparation. 

MEDICINAL  PREPARATIONS. 

(2)  Pills,  talilets,  powders,  tinctures,  troches  or  lozenges,  sirups,  medicinal 
cordials  or  bitters,  anodynes,  tonics,  plasters,  liniments,  salves,  ointments, 
pastes,  drops,  waters  (except  those  taxed  under  section  628  of  this  act),  essences, 
spirits,  oils,  and  otJber  medicinal  preparations,  compoimds,  or  compositions 
(not  including  serums  and  antitoxins),  upon  the  amount  paid  for  any  of  the 
above  as  to  which  the  manufacturer  or  producer  claims  to  have  any  private 
formula,  secret,  or  occult  art  for  making  or  preparing  the  same,  or  has  or  claims 
to  have  any  exclusive  right  or  title  to  the  making  or  preparing  the  same,  or 
which  are  prepared,  uttered,  vended,  or  exposed  for  sale  under  any  letters 
patent,  or  trade-mark,  or  which  (if  prepared  by  any  formula,  published  or 
impublished)  are  held  out  or  recommended  to  the  public  by  the  makers,  ven- 
dors, or  proprietors  thereof  as  proprietary  medicines  or  medicinal  proprietary 
articles  or  preparations,  or  as  remedies  or  specifics  for  any  disease,  diseases, 
or  affection  whatever  affecting  the  human  or  animal  body:  Provided,  That  the 
provisions  of  this  section  shall  not  apply  to  the  sale  of  vaccines  and  bacterines 
which  are  not  advertised  to  the  general  lay  public,  nor  to  the  sale  by  a  physician 
in  personal  attendance  upon  a  patient  of  medicinal  preparations  not  so  adver- 
tised. 

Art.  11.  Medicinal  preparations:  Articles  included. — A  medicine, 
medicinal  preparation,  or  specific  is  a  preparation  of  any  substance 
whatever  intended  to  be  applied  for  the  prevention,  cure,  or  mitiga- 


tion  of  pain  or  disease  in  the  human  or  animal  body.  Medicinal 
preparations  for  beasts,  when  the  same  would  be  taxable  if  used  by- 
man,  are  taxable;  thus,  for  example,  Arona,  National  Corn  Remover, 
and  Criswell's  Jimson  Weed  Plasters  are  taxable.  But  sprays  to  bo 
applied  to  cows,  horses,  and  other  animals,  to  keep  off  flies,  vermin, 
etc.,  are  not  taxable.     (See  Art.  17.) 

Art.  12.  Medicinal  preparations:  Scope  of  tax. — Any  of  the  enu- 
merated articles  are  taxable  if: 

(a)  The  manufacturer  or  producer  claims  to  have  any  private 
formula,  secret  or  occult  art  for  making  or  preparing  the  same;  or 

(h)  The  manufacturer  or  producer  has  or  claims  to  have  any  exclu- 
sive right  or  title  to  the  making  or  preparing  the  same;  or 

(c)  They  are  prepared,  uttered,  vended,  or  exposed  for  sale  under 
any  letters  patent  or  trade-mark;  or, 

(d)  They  are  prepared  by  any  formula,  published  or  unpublished, 
and  are  held  out  or  recommended  to  the  public  by  the  makers, 
vendors,  or  proprietors  thereof  (1)  as  proprietary  medicines  or  me- 
dicinal proprietary  articles  or  preparations  or  (2)  as  remedies  or 
specifics  for  any  disease,  diseases,  or  affection  whatever  affecting  the 
human  or  animal  body. 

The  above  conditions  are  in  the  alternative.  Thus,  for  example,  if 
an  article  is  made  or  prepared  by  a  manufacturer  claiming  to  have 
a  private  formula,  secret  or  occult  art  for  it,  it  is  taxable,  even  though 
it  is  not  prepared,  uttered,  vended,  or  exposed  for  sale  under  any 
letters  patent  or  trade-mark,  and  it  is  not  held  out  or  recommended 
to  the  public  as  a  proprietary  medicme  or  medicinal  proprietary 
article  or  preparation,  or  as  a  remedy  or  specific  for  any  disease  or 
affection  of  the  human  or  animal  body. 

Art.  13.  Medicinal  preparations :  Under  formula. — Where  medicinal 
preparations  are  sold  mider  labels  which  do  not  indicate  that  the 
formula  is  pubhshed  they  wiU  be  considered  to  be  prepared  under 
private  formulas,  unless  proof  is  submitted  that  the  formula  is  not 
secret. 

Art.  14.  Medicinal  preparations:  Under  exclusive  right. — If  an  ar- 
ticle is  advertised  under  the  name  of  the  manufacturer,  or  any  nams 
in  the  possessive  case  is  used  on  the  label  or  in  the  literature  describing 
the  medicinal  preparation,  or  the  name  of  the  manufacturer  is  made 
.a  part  of  the  name  or  title,  or  any  intimation  is  otherwise  given  that 
the  article  is  of  distinctive  origin,  the  tax  is  imposed. 

Art.  1.5.  Medicinal  preparations:  Under  letters  patent  or  trade- 
mark.— Medicmal  preparations  sold  under  letters  patent  are  taxable. 
Where  medicinal  preparations  are  sold  under  what  appears  to  be  or 
what  is  intended  to  be  a  trade-mark  appropriated  to  the  article,  the 
tax  attaches.  A  coined  name  for  a  particular  medicinal  preparation, 
to  distmguish  it  from  same  or  like  preparations  of  other  manufacture, 


8 

is  a  trade-mark  under  section  907,  and  amounts  to  a  holding  out  of 
that  preparation  as  proprietary. 

Art.  16.  Medicinal  preparations:  held  out. —  (a)  The  taxability  of 
a  medicinal  preparation  is  determined  by  the  manner  in  which  it  is 
prepared  or  the  way  in  which  it  is  put  upon  the  market.  "Held  out 
or  recommended"  includes  representation  by  any  means,  pei^onal 
canvass  and  statements  on  the  labels,  in  pamphlets  and  in  advertise- 
ments, or  otherwise.  A  holding  out  or  recommendation  intended 
for  physicians  only  is  a  holding  out  to  the  public. 

(b)  Any  substance  or  preparation  sold  or  held  out  to  the  general  lay 
public  as  suitable  for  use  in  the  preparation  by  the  consumer  of  a 
remedy  or  medicinal  preparation  for  use  is  taxable,  even  though  not 
capable  of  use  as  a  medicine  without  further  preparation. 

(c)  Tlie  tax  applies  to  a  medicinal  preparation  held  out  by  the 
producer  to  the  public  as  a  proprietary  medicine  or  as  a  remedy  for 
disease,  even  if  it  is  an  uncompounded  natural  substance  merely 
dried  or  refined. 

(d)  Many  articles  or  substances  wliich  are  not  usually  considered 
as  belonging  to  materia  medica  may  become  taxable  medicinal 
preparations  by  being  held  out  or  advertised  as  remedies  for  diseases 
affecting  the  human  or  animal  body;  thus,  boric  acid  when  held  out 
as  a  medicinal  preparation  or  sold  under  a  trade-mark  as  a  medicinal 
preparation  is  taxable,  and  licorice  put  up  in  sticks,  lozenges,  or  other 
forms  suitable  for  medicinal  piuposes  and  sold  under  a  trade-mark 
is  subject  to  the  tax.     (See  Art.  15.) 

PREPARATIONS   NOT   TAXABLE.  , 

Art.  17.  Preparations  not  taxable. —  (a)  Preparations  made  in  ac- 
cordance with  formulas  contained  in  the  United  States  Pharmacopoeia 
and  National  Formulary  by  pharmaceutical  manufactm-ei"s,  when  not 
held  out  or  recommended  as  proprietary  medicines  or  medicinal  pro- 
prietary articles  or  preparations,  or  as  remedies  or  specifics,  are  not 
subject  to  the  tax,  but  if  so  held  out  or  recommended  they  are  tax- 
able, although  not  identified  by  any  name,  trade-mark,  or  otherwise. 

(b)  Food  preparations  as  distinguished  from  medicinal  prepara- 
tions are  not  taxable;  thus,  products  recommended  as  food  for  the 
sick  (other  than  as  remedies  or  specifics  for  an  ailment),  such  as 
Thompson's  malted  milk,  malted  beef  peptone,  or  Horlick's  malted 
milk,  are  not  taxable.  So,  too,  articles  and  preparations  commonly 
known  as  stock  foods,  avenarious  carbolineum,  mixed  feeds,  chicken 
feeds,  etc.,  not  recommended  or  held  out  as  remedies  or  specifics 
for  affections  or  diseases,  but  as  feed  only,  and  other  food  prepara- 
tions, whether  for  man  or  beast,  miless  held  out  or  recommended  as 
remedies  or  specifics  for  diseases  of  the  human  or  animal  body,  are 
not  taxable. 


(c)  Poisons  and  exterminators  of  rodents  and  insects,  insecticides, 
disinfectants  (other  than  those  manufactm-ed  and  sold  for  use  in  the 
treatment  of  wounds  or  as  cleansers  of  any  portion  of  the  human  or 
animal  body),  are  not  medicines  or  medicinal  preparations,  com- 
pounds, or  compositions  within  the  meaning  of  this  section,  and  are 
not  taxable. 

id)  Vaccines  and  bacterines  which  are  not  advertised  to  the  general 
lay  public,  and  all  serums  and  antitoxins,  are  specifically  exempted 
from  taxation. 

{e)  Natural  mineral  watei's  and  table  waters,  and  artificial  mineral 
waters  (whether  carbonated  or  not),  and  other  carbonated  waters, 
are  not  taxable  under  section  907  if  intended  for  use  solely  as 
beverages. 

SALES   BY   PHYSICIAN. 

Art.  18.  Sales  by  physician. — The  sale  by  the  physician  in  personal 
attendance  upon  the  ]>atient  of  medicinal  preparations  not  advertised 
to  the  general  lay  public  is  not  taxable.  The  sale  by  the  physician 
must  be  when  he  is  in  personal  attendance  upon  the  patient  and  of 
medicine  actual!}"  intended  for  consumption  or  use  by  the  patient. 
The  sale  of  such  articles  by  a  druggist  upon  prescription  of  a  physician 
is  not  exempt.  If  the  article  is  advertised  to  the  general  lay  public 
it  is  taxable  even  when  sold  by  a  physician  in  personal  attendance 
on  a  patient. 

PRINTED   DIRECTIONS   OR   AUTOGRAPH. 

i^RT.  19.  Printed  directions  or  autograph. — (a)  Printing  on  the 
labels  the  directions  and  indications  for  use,  dosage,  and  other  similar 
matter  will  not  alone  render  preparations  made  under  a  standard 
formula  taxable,  provided  the  preparation  is  not  held  out  or  recom- 
mended as   a  proprietary  preparation  or  as  a  remedy  or  specific. 

(b)  The  autographic  name  of  the  manufacturer  of  a  medicinal 
preparation  printed  across  the  middle  of  the  label  is  not  a  trade-mark 
under  section  907  and  does  not  amount  to  a  holding  out  of  the  prepara- 
tion as  proprietary.     (But  see  Art.  14.) 

COLLECTION  OF  TAX. 

Sec.  907.  (6)  Thetaxesimposedby  this  section  shall  be  collected  by  whichever 
of  the  following  methods  the  Commissioner  may  deem  expedient:  (1)  By  stamp 
affixed  to  such  article  by  the  vendor,  the  cost  of  which  shall  be  reimbursed  to  the 
vendor  by  the  purchaser;  or  (2)  by  payment  to  the  vendor  by  the  purchaser  at 
the  time  of  the  sale,  the  taxes  so  collected  being  returned  and  paid  to  the  United 
States  by  such  vendor  in  the  same  manner  as  provided  in  section  502. 

Art.  20.  Collection  of  tax. — Payment  of  the  tax  shall  be  by  stamps 
affixed  to  the  article  by  the  vendor,  the  cost  of  which  shall  be  reim- 
bursed to  the  vendor  by  the  purchaser.  Hence,  no  form  of  return  of 
tax  payment  is  required  from  the  dealer.  The  pmchase  and  correct 
affixing  of  stamps  fulfills  the  law. 


1(3 

AFFIXING    AND   CANCELING   OF   STAMPS. 

Sec.  1104.  That  whenever  an  adhesive  stamp  is  used  for  denoting  any  tax 
imposed  by  this  title,  except  as  hereinafter  provided,  the  person  using  or 
aflixing  the  same  shall  write  or  stamp  or  cause  to  be  written  or  stamped  there- 
upon the  initials  of  his  or  its  name  and  the  date  upon  which  the  same  is  attached 
or  used,  so  that  the  same  may  not  again  be  used:  Provided,  That  the  Commis- 
sioner  may  prescribe  such  other  method  for  the  cancellation  of  such  stamps  as  he 
may  deem  expedient. 

Art.  21.  Affixing  and  canceling  of  stamps. — Each  stamp  affixed  to 
a  taxable  article  must  be  canceled  in  such  a  manner  as  to  prevent  the 
further  use  of  the  same.  If  possible,  the  stamp  should  be  affixed  to 
the  outside  of  the  package  or  container  of  the  taxed  commodity,  so 
that  upon  opening  the  same  the  stamp  will  be  destroyed.  The  initials 
or  the  name  of  the  vendor,  together  with  the  date  when  the  stamp  was 
affixed  or  canceled,  must  appear  upon  the  canceled  stamp.  This 
shall  constitute  the  act  of  cancellation  of  the  stamp.  Stamps  may  be 
affixed  and  canceled  by  the  manufacturer,  producer,  or  importer  of 
the  taxed  articles,  or  the  dealer,  in  advance  of  the  sale,  provided  the 
selling  price  and  the  tax  thereon  be  clearly  indicated  to  the  purchaser 
in  such  manner  as  not  to  confuse  him. 

REDEMPTION   OF   STAMPS. 

Art.  22.  Eedemption  of  stamps.— Unused  stamps  may  be  redeemed 
on  claim  executed  on  Form  46,  presented  by  the  owner,  or  his  author- 
ized representative,  accompanied  by  the  stamps.  Such  claims  should 
show  that  the  claimant  is  the  owner  of  the  stamps  presented,  that 
they  were  purchased  from  the  Government  within  two  years  of  filing 
claim,  and  that  the  stamps  are  unused,  explaining  any  cancellation 
or  appearance  of  having  been  used.  In  case  of  stamps  affixed  in  error 
to  articles  not  taxable  or  in  excess  to  articles  taxable  and  unsold,  the 
claims  should  be  accompanied  by  the  stamps,  which  should  be  de- 
tached in  the  presence  of  a  deputy  collector,  or,  if  they  can  not  be 
detached  and  filed,  by  a  showing  of  that  fact  and  by  the  deputy 
collector's  certificate  to  their  mutilation  or  destruction  by  him,  and 
his  indorsement  thereon  that  claim  was  filed.  In  case  of  sale  made 
where  the  articles  or  sales  were  not  taxable  or  were  stamped  in 
excess,  refund  may  not  be  made  except  to  the  buyer  or  taxpayer. 
There  is  no  authority  for  the  redemption  of  stamps  lost  or  stolen, 
and  no  provision  for  restamping  free  of  charge  where  stamps  become 
lost  from  articles  or  where  it  becomes  necessary  to  repack.  In  case 
it  is  desired  to  repack  articles  to  which  stamps  have  been  affixed  and 
which  have  not  yet  been  sold  to  consumer  or  user,  redemption  may 
be  had  of  the  stamps  representing  the  taxes  that  did  not  accrue,  the 
stamps  to  be  redeemed  in  such  case  to  be  detached  in  the  presence 
of  a  deputy  collector. 


11 

EXTENSION   OF  EXISTING   STATUTES. 

Sec.  1305.  That  all  adminiBtrative,  special,  or  stamp  provisions  of  law, 
including  the  law  relating  to  the  assessment  of  taxes,  so  far  as  applicable,  are 
hereby  extended  to  and  made  a  part  of  this  act,  and  every  person  liable  to 
any  tax  imposed  by  this  act,  or  for  the  collection  thereof,  shall  keep  such 
records  and  render,  under  oath,  such  statements  and  returns,  and  shall  comply 
with  such  regulations  as  the  Commissioner,  with  the  approval  of  the  Secretary, 
may  from  time  to  time  prescribe. 

Whenever  in  the  judgment  of  the  Commissioner  necessary  he  may  require 
any  person,  by  notice  served  upon  him,  to  make  a  return  or  such  statements 
as  he  deems  sufficient  to  show  whether  or  not  such  person  is  liable  to  tax. 

The  Commissioner,  for  the  purpose  of  ascertaining  the  correctness  of  any 
return  or  for  the  purpose  of  making  a  return  where  none  has  been  made,  ia 
hereby  authorized,  by  any  revenue  agent  or  inspector  designated  by  him  for 
that  purpose,  to  examine  any  books,  papers,  records,  or  memoranda  bearing 
upon  the  matter  required  to  be  included  in  the  return,  and  may  require  the 
attendance  of  the  person  rendering  the  return  or  of  any  officer  or  employee 
of  such  person,  or  the  attendance  of  any  other  person  having  knowledge  in  the 
premises,  and  maj'^  take  his  testimony  with  reference  to  the  matter  required 
by  law  to  be  included  in  such  return,  with  power  to  administer  oaths  to  such 
person  or  persons. 

Sec.  1400.  (6)  *  *  *  In  the  case  of  any  tax  imposed  by  any  part  of  an 
act  herein  repealed,  if  there  is  a  tax  imposed  by  this  act  in  lieu  thereof,  the 
provision  imposing  such  tax  shall  remain  in  force  until  the  con-esponding  tax 
under  this  act  takes  effect  under  the  provisions  of  this  act. 

Art.  23.  Aids  to  collection  of  tax. — In  collecting  the  excise  taxes 
the  commissioner  has  the  benefit  of  all  existing  internal-revenue  laws. 
In  aid  of  the  enforcement  of  the  statute  the  commissioner  may 
require  any  person  to  keep  specified  records  to  render  returns  and 
statements  as  directed,  to  submit  himself  and  his  books  to  examina- 
tion, and  to  comply  with  such  regulations  as  may  be  prescribed. 

EXPORTS. 

Sec.  1310.  (c)  Under  such  rules  and  regulations  as  the  Commissioner  with  the 
approval  of  the  Secretary  may  prescribe,  the  taxes  imposed  under  the  pro- 
visions of  Titles  ^'I,  VII,  or  IX  shall  not  apply  in  respect  to  articles  sold  or 
leased  for  export  and  in  due  course  so  exported.  Under  such  rules  and  regu- 
lations the  amount  of  any  internal-revenue  tax  erroneously  or  illegally  collected 
in  .respect  to  exported  articles  ma}'  be  refunded  to  the  exporter  of  the  article 
instead  of  to  the  manufacturer,  if  the  manufacturer  waives  any  claim  for  the 
amount  so  to  be  refunded. 

Art.  24.  Exemption  of  export  sale. — The  tax  docs  not  attach  to 
the  sale  of  an  article  which  is  either  (1)  shipped  direct  to  a  foreign 
destination  by  the  manufacturer  himself  or  (2)  both  (a)  sold  by  him 
for  export  and  (h)  in  due  course  so  exported  by  the  purchaser.  Wliere 
a  manufacturer  at  the  time  an  article  is  sold  or  shipped  (whichever  is 
prior)  has  in  his  possession  an  order  or  contract  of  sale  showing  in 
writing  (1)  that  the  manufacturer  is  to  export  the  article  or  (2)  that 
the  purchaser  is  buying  the  article  in  order  to  export  it  prior  to  its 
being  used  or  subjected  to  further  manufacture,  there  is  a  presump- 


12 

tion  that  the  sale  of  the  article  is  exempt  from  tax,  as  an  export  sale, 
and  the  manufacturer  may,  for  a  period  of  six  months  from  the  date 
of  sale  or  shipment  (whichever  is  prior),  rely  on  such  presumption. 
This  presumption  becomes  conclusive  upon  the  manufacturer's  receiv- 
ing, and  attaching  to  such  order  or  contract,  before  the  termination 
of  such  period  of  six  months,  due  "proof  of  exportation"  (see  Art.  25) 
of  such  article.  On  the  other  hand,  if,  within  such  period  of  six 
months,  the  manufacturer  has  not  received,  and  attached  to  such 
order  or  contract,  such  "proof  of  exportation,"  then  the  pre- 
sumption that  such  sale  is  an  export  sale  disappears,  and  the 
manufacturer  shall  include  a  tax  on  the  sale  of  such  article  in  his 
return  for  the  month  in  which  such  period  of  six  months  expires. 
The  order  or  contract  of  sale  and  the  "proof  of  exportation"  must  be 
preserved  by  the  manufacturer  in  such  a  way  as  to  be  readily  acces- 
sible for  inspection  by  internal-revenue  officers.  No  sale  shall  be 
considered  to  be  exempt  from  tax  under  section  1310  (c)  of  the  act 
unless  its  character  as  an  export  sale  has  been  estabhshed  in  accord- 
ance with  the  above  provisions. 

Art.  25.  Proof  of  exportation. — By  the  term  "proof  of  exporta- 
tion" is  meant  (1)  an  affidavit  containing  the  following  information: 
The  name  and  address  of  the  manufacturer;  the  name  and  address  of 
the  exporter  (who,  if  not  the  manufacturer,  must  be  a  person  who 
has  purchased  direct  from  the  manufacturer) ;  the  respective  dates  of 
the  sale  (or  shipment,  whichever  is  prior),  and  exportation  of  the 
article;  the  price  for  which  purchased;  the  fact  that  the  article  has 
been  exported  by  the  manufactm"er  or  original  purchaser  without 
having  been  used  or  subjected  to  further  manufacture;  the  name  of 
the  port  of  foreign  destination;  the  name  and  address  of  the  carrier 
issuing  the  export  bill  of  lading;  and  any  further  information  neces- 
sary to  identify  the  article  sold  with  the  article  exported;  and  (2) 
attached  to  such  affidavit,  a  copy  of  the  export  bill  of  lading,  or  a 
certificate  by  the  agent  or  representative  of  the  export  carrier  show- 
ing the  exportation  of  the  article,  or,  if  exported  by  parcel  post,  a 
copy  of  the  certificate  of  mailing. 

TRADE   WITH   POSSESSIONS   OF   UNITED   STATES. 

Sec.  1304.  That  there  shall  be  levied,  collected,  and  paid  in  the  United 
States,  upon  articles  coming  into  the  United  States  from  the  Virgin  Islands, 
a  tax  equal  to  the  internal-revenue  tax  imposed  in  the  United  States  upon  like 
articles  of  domestic  manufacture;  such  articles  shipped  from  such  islands  to 
the  United  States  shall  be  exempt  from  the  pajonent  of  any  tax  imposed  by 
the  internal-revenue  laws  of  such  islands:  Provided,  That  there  shall  be  levied, 
collected,  and  paid  in  such  islands,  upon  articles  imported  from  the  United 
States,  a  tax  equal  to  the  internal-revenue  tax  imposed  in  such  islands  upon 
like  articles  there  manufactured ;  and  such  articles  going  into  such  islands  from 
the  United  States  shall  be  exempt  from  payment  of  any  tax  imposed  by  th« 
internal-revenue  laws  of  the  United  States. 


13 

Art.  26.  Tra^e  with  possessions  of  United  States. — A  sale  wliich 
results  in  the  shipment  of  articles  into  the  United  States  from  the 
Virgin  Islands  is  taxable  to  the  same  extent  as  a  sale  of  articles  within 
the  United  States.  Articles  going  into  the  Virgin  Islands  from  the 
United  States  are  free  from  tax  in  the  United  States.  The  same 
rules  apply  to  trade  with  Porto  Rico  and  the  Philippine  Islands. 
(See  sec.  1000  of  the  Revenue  Act  of  1917  and  Sec.  V  of  the  act  of 
Aug.  4,  1909,  as  amended  by  vSec.  IV,  Subdivision  C,  of  the  act  of 
Oct.  3,  1913.)  The  tax  attaches,  howevw,  to  articles  shipped  to 
other  possessions  of  the  United  States,  including  the  Canal  Zone. 

PENALTIES. 

Art.  27.  Penalties. — The  act  provides: 

Sec.  1307.  *  *  *  All  administrative  and  penalty  provisions  of  Title  XI 
of  this  act,  in  so  far  as  applicable,  shall  apply  to  the  collection  of  any  tax  which 
the  Commissioner  determines  or  prescribes  shall  be  paid  by  stamp. 

Sec.  1102.  That  whoever— 

(6)  Consigns  or  ships,  or  causes  to  be  consigned  or  sliipped,  by  parcel  post 
any  parcel,  package,  or  article  without  the  full  amount  of  tax  being  duly  paid; 

(c)  Manufactures  or  imports  and  sells,  or  offers  for  sale,  or  causes  to  be 
manufactured  or  imported  and  sold,  or  offered  for  sale,  any  playing  cards, 
package,  or  other  article  without  the  full  amount  or  tax  being  duly  paid; 

{d)  Makes  use  of  any  adehsive  satmp  to  denote  any  tax  imposed  by  this  title 
without  canceling  or  obliterating  such  stamp  as  prescribed  in  section  1104; 

Is  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  pay  a  fine  of 
not  more  than  $100  for  each  offense. 

Sec.  1103.  That  whoever— 

(a)  Fraudulently  cuts,  tears,  or  removes  from  any  vellum,  parchment,  paper, 
instrument,  writing,  package,  or  article,  upon  which  any  tax  is  imposed  by  this 
title,  any  adhesive  stamp  or  the  impression  of  any  stamp,  die,  plate,  or  other 
article  provided,  made,  or  used  in  pursuance  of  this  title; 

(6)  Fraudulently  uses,  joins,  fixes,  or  places  to,  with,  or  upon  any  vellum, 
parchment,  paper,  instrument,  writing,  package,  or  article,  upon  wliich  any 
tax  is  imposed  by  this  title,  (1)  any  adhesive  stamp,  or  the  impression  of  any 
stamp,  die,  plate,  or  other  article,  which  has  been  cut,  torn,  or  removed  from 
any  other  vellum,  parchment,  paper,  instrument,  writing,  package,  or  article, 
upon  which  any  tax  is  imposed  by  this  title;  or  (2)  any  adhesive  stamp  or  the 
impression  of  any  stamp,  die,  plate,  or  other  article  of  insufficient  value;  or 
(3)  any  forged  or  counterfeit  stamp,  or  the  impression  of  any  forged  or  counter- 
feited stamp,  die,  plate,  or  other  article; 

(c)  Willfully  removes,  or  alters  the  cancellation,  or  defacing  marks  of,  or 
otherwise  prepares,  any  adhesive  stamp,  with  intent  to  use,  or  cause  the  same 
to  be  used,  after  it  has  been  already  used,  or  knowingly  or  willfully  buys,  sells, 
offers  for  sale,  or  gives  away,  any  such  washed  or  restored  stamp  to  any  person 
for  use,  or  knowingly  uses  the  same; 

((f)  Knowingly  and  without  lawful  excuse  (the  burden  of  proof  of  such 
excuse  being  on  the  accused)  has  in  possession  any  washed,  restored,  or  altered 
stamp,  which  has  bpen  removed  from  any  vellum,  parchment,  paper,  instru- 
ment, writing,  package,  or  article; 

Is  guilty  of  a  misdemeanor,  and  upon  conviction  shall  be  punished  by  a  fine 
of  not  more  than  $1,000,  or  by  imprisonment  for  not  more  than  five  years,  or 


u 

both,  and  any  such  reused,  canceled,  or  counterfeit  stamp  and  the  vellum; 
parchment,  document,  paper,  package,  or  article  upon  which  it  is  placed  or 
impressed  shall  be  forfeited  to  the  United  States. 

Sec.  1308.  (a)  That  any  person  required  under  titles  *  *  *  to  pay,  or  to 
collect,  account  for  and  pay  over  any  tax,  or  required  by  law  or  regulations 
made  under  authority  thereof  to  make  a  return  or  supply  any  information  for 
the  purposes  of  the  computation,  assessment,  or  collection  of  any  such  tax,  who 
fails  to  pay,  collect,  or  truly  account  for  and  pay  over  any  such  tax,  make  any 
Buch  return  or  supply  any  such  information  at  the  time  or  tiines  required  by 
law  or  regulation  shall  in  addition  to  other  penalties  provided  by  law  be  subject 
to  a  penalty  of  not  more  than  $1,000. 

(b)  Any  person  who  willfully  refuses  to  pay,  collect,  or  truly  account  for  and 
pay  over  any  such  tax,  make  such  return  or  supply  such  information  at  the  time 
or  times  required  by  law  or  regulation,  or  who  willfully  attempts  in  any  manner 
to  evade  such  tax  shall  be  guilty  of  a  misdemeanor  and  in  addition  to  other 
penalties  provided  by  law  shall  be  fined  not  more  than  $10,000  or  imprisoned 
for  not  more  than  one  year,  or  both,  together  with  the  costs  of  prosecution. 

(c)  Any  person  who  willfully  refuses  to  pay,  collect,  or  truly  account  for  and 
pay  over  any  such  tax  shall  in  addition  to  other  penalties  provided  by  law  be 
liable  to  a  penalty  of  the  amount  of  the  tax  evaded,  or  not  paid,  collected,  or 
accounted  for  and  paid  over,  to  be  assessed  and  collected  in  the  same  manner 
as  taxes  are  assessed  and  collected.    *    *    * 

(d)  The  term  "person"  as  used  in  this  section  includes  an  officer  or  employee 
of  a  corporation  or  a  member  or  employee  of  a  partnership,  who  as  such  officer, 
employee,  or  member  is  under  a  duty  to  perform  the  act  in  respect  of  which  the 
the  violation  occurs. 

Sec.  1319.  That  whoever  in  connection  with  the  sale  *  *  *  or  offer 
for  sale  *  *  *  of  any  article,  or  for  the  purpose  of  making  such  sale 
*  *  *  makes  any  statement,  written  or  oral,  (1)  intended  or  calculated  to 
lead  any  person  to  believe  that  any  part  of  the  price  at  which  such 
article  is  sold  *  *  *  or  offered  for  sale  *  *  *  consists  of  a  tax  im- 
posed under  the  authority  of  the  United  States,  or  (2)  ascribing  a  particular 
part  of  such  price  to  a  tax  imposed  under  the  authority  of  the  United  States, 
knowing  that  such  statement  is  false  or  that  the  tax  is  not  so  great  as  the  por- 
tion of  such  price  ascribed  to  such  tax,  shall  be  guilty  of  2  misdenisanor  and 
upon  conviction  thereof  shall  be  punished  by  a  fine  of  not  more  than  $1 ,000 
or  by  imprisonment  not  exceeding  one  yesXj  or  both. 

AUTHORITY   FOR   REGULATIONS. 

Sec.  1309.  That  the  Commissioner,  with  the  approval  of  the  Secretary,  is 
hereby  authorized  to  make  all  needful  rules  and  regulations  for  the  enforce- 
ment of  the  provisions  of  this  act. 

Art.  28.  Promulgation. — In  pursuance  of  tlie  statute  the  fore- 
going regulations  are  hereby  made  and  promulgated  and  all  rulings 
inconsistent  herewith  are  hereby  revoked. 

Daniel  C.  Roper, 
Commissioner  of  Internal  Revenue. 
Approved  May  9,  1919: 
Carter  Glass, 

Secretary  of  the  Treasury. 

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Syracuse,  N.  Y. 

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